Download Managing Services for Business Markets

Chapter 10:
Managing Services for
Business Markets
PowerPoint by:
Ray A. DeCormier, Ph.D.
Central Connecticut State University
Customer Experience Approach
• Recent research discovered that only 8% of customers think that their
experience with their vendors were superior, whereas 80% of vendors
think that they delivered a superior one.
• This research points out an obvious disconnect.
• By focusing on core products instead of understanding the customer’s
experience, many companies lose their customer and never know why.
• Also, by not understanding the customer, companies lose an
opportunity to create value and cement relationships.
Customer Experience Maps
• One way to understand the customer better is to “Map”
out experiences at various “touchpoints.”
• Touchpoints are spots where a seller has direct or indirect
contact with the customer about the product or service
over time.
• The map points out what is most important in the
seller/customers’ experience.
Ultimate Goal of Experience Map
The ultimate goal of an Experience Map is to identify:
1. Importance customers place on each element of the
experience.
2. Customers’ expectations for each element.
3. The customers’ perception of firm’s performance
versus competitors.
•
Once the map is developed, the next step is to meet
with the customer and pare down the list to the
most critical issues.
Customer Experience Life Cycle Map
Figure 10.1 The First Step in Understanding a Customer’s Experience is to Develop a Life Cycle Map
A representative set of customer-company interactions
Relationship
initiation
The company
exposes the
customer to its
marketing
message
The customer
seeks relevant
information
Provider
evaluation
Account
setup
The customer
gets initial price
and lead-time
quotes
The customer
obtains
materials for
account setup
The customer
puts out an RFP
The customer
provides
account profile
information
The customer
evaluates
providers and
negotiates
terms and
pricing
The customer
selects the
provider
The company
confirms setup
and activation
The company
performs
courtesy followup
The customer
requests
product
information
Order
placement
Product
reception
and use
The customer
selects the
product
The customer
tracks order
status
The customer
places the order
(fills out the
order form
The company
and the
customer
arrange the
final delivery
terms
The customer
prepares
specialty
documents
when required
(for example,
for rush
delivery)
The company
and the
customer
arrange initial
delivery terms
The customer
receives and
inspects the
product
The customer
refuses or
accepts the
product
Problem
resolution
Payment
Account
maintenance
The customer
files a claim
and obtains
resolution
The customer
receives and
validates the
invoice
The customer
maintains
profile
information
The customer
notifies the
company of a
problem and
obtains
resolution
The customer
makes the
payment
The customer
maintains
supplies
The customer
seeks an
invoice
adjustment
and obtains
resolution
SOURCE: David Rickard, “Winning by Understanding the Full Customer Experience,” The Boston Consulting Group, Inc., 2007, p. 6. Accessed at
http://www.bcg.com
The company
provides
general support
(not related to
problems)
The customer
obtains ongoing
price quotes
From a Product to a Solutions
Perspective
Product Perspective
Solutions Perspective
Value
Proposition
Win by creating innovative
products and enriching
features of existing products
Win by creating and delivering superior
customer solutions
Value
Creation
Value is created by the firm
Value is co-created by the customer and
the firm
Designing
Offerings
Start with the product or
service, and then target
customer segments
Start with the customer problem, and
then assemble required products and
services to solve the problem
CompanyCustomer
Relationship
Transaction-based
Interaction-based and centered on the
co-creation of solutions
Focus on
Quality
Quality of internal processes
and company offerings
Quality of customer-firm interactions
Determine Unique Capabilities
• Before developing solutions, B2B firms must:
1. Define their own capabilities
2. Figure out how to use them to help customers to:
a. Reduce costs
b. Increase responsiveness
c. Improve quality
d. Maybe even contract to do some of the work
 Products provide the platform for the delivery
of services.
Do Service Transition Strategies Pay Off?
• firms add services to their existing product offerings to make…
1. Differentiate and make offering unique
2. Stymie duplication/ imitation by rivals
3. Add value for customers - thereby enhancing profitability and
firm value.
• Does it pay off?
• It depends…
•
•
•
•
Can add revenue for slow-growth industries
Can engender greater loyalty
But also adds cost and can degrade productivity
Can become “expected” by customers who adopt an attitude of
entitlement and refuse to pay extra
All Products Are Services
• Most marketers know that all products are
really just wrapped-up services.
• So how do we distinguish between services
and products?
• Generally,
1. Services are intangible.
2. Products are tangible.
Services Are Different
They consist of…
Deeds,
Processes, and
Performances
…that are intangible.
Continuum – Tangible to Intangible
The Continuum suggest that there are very
few pure products or very few pure services.
It’s a useful tool for understanding the
product-service definition issue.
Many services are a combo of services and
products. Example: hotels – offer sleeping
service to food products
Business Product-Service Continuum – Tangibility Based
12
How Services Differ from Goods
Inseparable – produced and
consumed simultaneously
Non-standardized
Heterogeneous
Perishable –
Use it or Lose it
Intangible –
Lacks ownership
Unique Service Characteristics
Business services that are intangible-dominant market offerings.
Few services are totally intangible – they often contain
elements with tangible properties.
5 Dimensions of Service Quality
Customer Satisfaction and Loyalty
Customer-linking processes that affect satisfaction:
1. Basic elements of the product or service that customers
expect all competitors to provide.
2. Basic support services, such as technical assistance or
training, that makes product more effective.
3. A recovery process for quickly fixing product or service
problems.
4. Extraordinary services that so excel in solving customers’
unique problems or in meeting customer needs that these
services make the product or service seem customized.
Segmenting Services
Segmentation demands that a group must be large and
homogeneous enough to support a marketing effort.
First, service segments are often narrower because
customers expect services to be customized.
Second, service segmentation focuses on what business
buyers expect as opposed to what they need.
Third, segmenting service markets help firms adjust their
service capacity more effectively.
Total demand is made up of many small segments, thus
they are able to control them more easily and
predictably.
Developing the Service Package
 The service package can be thought of as the
product dimension of service, to include:
1. Essential concept of the service
2. Range of service provided
3. Quantity, quality and level of service
In addition:
 Service package must consider some factors unique
to services – personnel, physical product and a
process for providing the service.
Conceptualizing the Service Product
Customer–Benefit Concept
 Customer–Benefit Concept is understanding those
service attributes that are important to the
customer. They include…
a. Functional,
b. Effectual, and
c. Psychological components
… that result in a successful service experience.
 Consistent quality is the goal so quality-control is
of utmost importance.
Service Delivery System
 The final element addresses: “How is the service
going to be provided?”
 This includes:
1. Jobs that qualified people are going to do
2. Necessary equipment, facilities and layout
3. Carefully developed procedures
that insure successful delivery of the service
Service-Savvy Sales Force
• Moving from product-related selling to product/service-related
selling demands new approaches.
• Services often requires:
– A long sales cycle
– A complex sales process
– Senior executives on both the selling and buying sides
• To foster a successful relationship, many companies employ a
diverse sales force where:
– One salesperson hunts for product sales
– Another provides the service with the goal of developing the
relationship
Profitability of the Service
 Many marketers offer a myriad of services
such as:
1. Next-day delivery
2. Customized handling
3. Specialized labeling
4. Tracking
5. Etc.
 The question is:
Are these additional services profitable?
Service Promotion
• Services are promoted in similar fashion as
products. However, being intangible, the service
should be associated to some tangible form by its
marketers.
• Example: Service marketers enhance
differentiation by creating tangible clues such as:
–
–
–
–
–
Logos
Uniforms
Building appearance
Color schemes
Or something specific to the service